Drake v. Holbrook

• Decision Date: 21 January 1904
• Citation: 78 S.W. 158
• Parties: DRAKE et al. v. HOLBROOK.
• Court: Kentucky Court of Appeals

78 S.W. 158

DRAKE et al. v. HOLBROOK.

Court of Appeals of Kentucky.

January 21, 1904

Appeal from Circuit Court, Ohio County.

"Not to be officially reported."

Action by W. P. Drake and others against Rowan Holbrook to recover damages for deceit. From a judgment in favor of defendant plaintiffs appeal. Reversed.

Settle & Slack and M. L. Heavrin, for appellants.

Glenn &amp Ringo and H. P. Taylor, for appellee.

BARKER J.

This is the second appeal in this case. The former opinion of this court is to be found in 66 S.W. 512. The rulings on the former appeal, in so far as applicable, constitute the law of this; and, as the facts on the two trials were practically the same, it only remains to ascertain what has been decided in order to dispose of the case before us. The rights of the parties litigant, under the doctrine of res adjudicata, are circumscribed by the principles announced in the first opinion.

Appellants allege in their petition that the appellee sold to them 20 shares of the capital stock in the Field Coal Company, of the par value of $100 each, for the sum of $4,500, and, as an inducement to them to make the purchase, fraudulently represented that the collectible outstanding accounts due the company were sufficient to pay off all its indebtedness, except about the sum of $700; that they, relying upon these representations of appellee, made the purchase in question; that these representations as to the financial standing of the corporation were false, and made with the intent to deceive appellants, and to induce them to make the purchase; that the indebtedness of the corporation at the time these representations were made exceeded by far its collectible assets; and that, by reason of the fraud and deceit practiced upon them by appellee, they were damaged in the sum of $4,500. Appellee denied making the representations as alleged by appellants, or that the representations he actually made were fraudulent or false, or that appellants had been damaged in any sum whatever, and alleged affirmatively that they made the purchase in question relying alone upon their own examination into the financial standing of the company. We have not undertaken to state the allegations of the pleading in this case with minute particularity, as their elaborate statement in the original opinion renders this unnecessary.

In the instructions of the court in the original trial below, the liability of appellee was made to turn upon the question as to whether or not he, "as an inducement to appellants to purchase his stock, falsely and fraudulently represented to them that the debts due the company, owed by good and solvent parties, were sufficient to pay all debts owed by said company at the time, and," etc. Upon this subject this court said: "It was pleaded, and not denied, that the appellee, Holbrook, was the owner of one-half the stock, and was the secretary and treasurer of the company. This being true, he cannot be heard to say he did not know the resources and liabilities of the company. It was his business, as secretary and treasurer, to know the financial condition of the corporation, and any statement made by him as to the financial condition of the corporation to the appellants would authorize them to rely thereon as the truth. Appellee being in condition to know, and it being his business to know, will not be permitted to say he in fact did not know the truth, as against his own statements to appellants." And in the next paragraph it is said: "We are of opinion that, in addition to the error in the instructions as above indicated, there was also error in the measure of damage." The error thus pointed out in the instructions was the fact that it made the liability of appellee to turn upon the question as to...